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Perry: Texas will opt out of Medicaid expansion, insurance exchange

Published: 9:15 p.m. Monday, July 9, 2012 In a sharply worded letter to federal officials Monday, Gov. Rick Perry said Texas will not participate in two key initiatives under the Affordable Care Act, noting that the law recently approved by the U.S. Supreme Court "will find no foothold here."
Perry said Texas will not expand Medicaid, forgoing an estimated $13 billion a year in federal money from 2014 to 2017, and will not create a health care exchange, an online market allowing uninsured people to shop for coverage.
"Please relay this message to the president," Perry wrote to Kathleen Sebelius, secretary of the U.S. Department of Health and Human Services. "Both represent brazen intrusions into the sovereignty of our state."
Last month's Supreme Court decision upheld the health care law but removed one of its toughest enforcement mechanisms: a threat to withhold all federal Medicaid funds from states that decline to expand the program to include more low-income residents.
The decision allowed Perry to join at least six other Republican governors, including the leaders of Florida and Louisiana, in rejecting the Medicaid expansion as bad policy and too costly. A dozen Democratic governors have indicated support for the expanded coverage.
Whether to expand Medicaid will fall to the Texas Legislature when it convenes in January. Democrats vowed to fight for expansion, but Perry's strong opposition makes it unlikely that the Republican-controlled Legislature will favor expansion, particularly when legislators first must plug a $4 billion to $5 billion shortfall in the 2011-12 Medicaid budget.
Perry's decision on the health care exchange probably won't be noticed by consumers. The federal government will create and administer exchanges for states that decline to establish the marketplace for government and private insurance plans. Exchanges include U.S. subsidies for people under the federal poverty level.
Perry's political opponents denounced his response as shortsighted.
"Mr. Perry is condemning the uninsured to ill health and premature death simply because he doesn't want to help President Obama," said James Moore, director of the Progress Texas political action committee. "Texans will now see their federal tax dollars go to pay for the expansion of Medicaid in other states."
The Texas Democratic Party accused Perry of political pandering.
"No person with a speck of intelligence would turn down billions in federal dollars that would be a boon to our economy and help Texans. But then again, this is Rick Perry," party spokeswoman Rebecca Acuña said.
One in four Texans lacks health insurance — about 6 million residents — the highest rate in the nation.
Fellow Republicans and conservatives praised Perry for restraining state spending and for acknowledging Medicaid as a "failed system" burdened by bureaucratic inefficiencies.
Expanding the program — which pays for health care for low-income Texans and people with disabilities — "would threaten even Texas with financial ruin," Perry wrote.
State officials have estimated that the health care law could add 1.5 million to 2.3 million low-income Texans to the Medicaid rolls by 2023 and increase state spending by $27 billion.
Both numbers — the increases in patients and spending — were figured two years ago and will decline an unknown amount as health officials take new circumstances into account, including a larger than expected increase in low-income children enrolled in state insurance programs, said Stephanie Goodman, spokeswoman for the Health and Human Services Commission.
Even so, the cost to state taxpayers will be "a very, very difficult pill to swallow, if you'll excuse the expression. We can't afford it," said House Speaker Joe Straus, R-San Antonio.
Dr. Dan Stultz, president of the Texas Hospital Association, noted that despite legitimate spending concerns, declining to expand Medicaid also carries a price as uninsured Texans continue to seek expensive care in emergency rooms, resulting in higher private insurance rates and hospital district tax rates.
Contact Chuck Lindell at 912-2569
Additional material from staff writer Tim Eaton